Valhi (VHI) Stock Forecast & Price Target

Valhi Inc. is positioned for significant growth, with projected EBITDA increasing at a robust 37% compound annual growth rate (CAGR), rising from $25 million in FY25 to $47 million by FY27, coupled with an improvement in EBITDA margin from 24.2% to 30.1% over the same period due to operating leverage. Additionally, the company's earnings per share (EPS) is anticipated to rise by 23% in the next 12 months, outpacing peers in the Canadian software consolidator sector, which are expected to see EPS growth of 12% to 13%. The positive growth outlook is further supported by a notable increase in eReferral volumes in Ontario, which experienced a 35% year-over-year increase in FY24 and an impressive 86% CAGR over the last five years, indicating a strengthening economic environment for Valhi's business segments.

Valhi Inc. faces a negative outlook primarily due to significant revenue decline in its Attend Anywhere segment, which saw a 57% drop over the past two years, resulting in revenues of only £5.0 million for FY25, influenced by pricing pressures and increased competition from alternatives like Microsoft Teams. Additionally, the overall productivity decline within the NHS, which is approximately 11% below pre-pandemic levels, continues to exert financial strain on the company's prospects in the healthcare sector. Further compounding these challenges, the anticipated drop in EBITDA margin from 26.4% in Q2 of FY25 to 21.5% in Q3 indicates a short-term deterioration in profitability, despite expectations for recovery in the following quarters.